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Two NAM-supported House bills now moving through Congress are “critical” to combating the practice of third-party litigation funding and should be advanced as soon as possible, the NAM told House Judiciary Committee leadership this week.

What’s going on: “Manufacturing in the United States relies on a properly working judiciary,” NAM Vice President and Deputy General Counsel of Litigation Erica Klenicki said ahead of a Tuesday committee markup of the Litigation Transparency Act of 2025 (H.R. 1109) and Protecting Our Courts from Foreign Manipulation Act (H.R. 2675). “Undisclosed third-party litigation funding affects the ability of courts to administer lawsuits in a fair and predictable way.”

• TPLF allows outside entities to invest in lawsuits—frequently ones they help instigate—in exchange for a portion of any settlement fee or damages that might be awarded. Given their investment, the funders may participate in plaintiffs’ strategic decision-making including whether to settle the case. Often the identities of these investors are completely unknown or revealed in camera, meaning disclosed only to the judge in a case.
• The first of the two measures marked up on Tuesday “would bring these unknown funders out of the shadows” so that parties “know who they are truly litigating against,” Klenicki said.
• The second bill “would prohibit adversarial foreign governments and sovereign wealth funds from investing in U.S. litigation and require the disclosure of any other type of foreign funding sources,” she continued, which would protect both American companies and U.S. national security.

Why it’s important: Runaway TPLF, a $16 billion industry, has had a significant and negative effect on manufacturing in the U.S., the NAM told House Judiciary Committee Chairman Jim Jordan (R-OH) and Ranking Member Jamie Raskin (D-MD).

• In patent cases, for example, the practice “drives nonpracticing entities that claim rights in technology they never used. Or foreign companies, investors and sovereign wealth funds secretly fund litigation as a way to drain American manufacturers’ time and resources and potentially access their intellectual property.”
• U.S. manufacturers spend over $360 billion a year in research and development, a sum that is “only possible because the resulting intellectual property is protected.”
• But with unchecked TPLF, that protection is very much in doubt, the NAM said.

What should be done: The House Judiciary Committee should support both measures, Klenicki concluded. The bills’ passage “would provide much-needed transparency in litigation and protect our courts from being used by foreign actors to the detriment of American companies and government.”
 
What’s next: The Protecting Our Courts from Foreign Manipulation Act was favorably reported yesterday by a vote of 15–11. However, the committee ran out of time for the Litigation Transparency Act, which will instead be marked up on Thursday.